NOTE 4 – REAL ESTATE TRANSACTIONS

Discussed below are the real estate transactions impacting the presentation in our consolidated balance sheets as of December 31, 2017 and 2016, and the profitability determination in our consolidated statements of income for the three years ended December 31, 2017:

Real Estate Sales

Landholding in Burwood, Australia (Initiated 2015, Settled 2017)

On May 12, 2014, we entered into a contract to sell our undeveloped 50.6 acre parcel in Burwood, Victoria, Australia, to Australand Holdings Limited (now known as Frasers Property Australia, “Frasers”) for a purchase price of $50.6 million (AU$65.0 million). We received $5.9 million (AU$6.5 million) on May 23, 2014, $16.6 million (AU$ 21.8 million) on June 19, 2017 and final settlement on December 14, 2017 of $28.1 million (AU$36.6 million).

The final sale price was adjusted by $56,000 (AU$75,000) due to an early settlement agreed between both parties. The final transaction gain is determined as follows:


(Dollars in thousands)	In AU$
Selling price	$	64,925
Less: Property book value		(52,108)
Total transaction gain, gross		12,817
Less: Direct costs incurred(1)		(439)
Total transaction gain, net	$	12,378

(1) Represents commissions and legal expenses incurred in connection with this transaction.

Landholding in Moonee Ponds, Australia (Initiated 2013, Settled 2015)

On October 15, 2013, we entered into a definitive purchase and sale agreement to sell this property for a sales price of $17.5 million (AU$23.0 million) payable in full upon closing of the transaction on April 16, 2015. In accordance with the requirements under US GAAP, we recognized a gain of $8.0 million (AU$10.3 million) in the second quarter of 2015 upon the receipt of sale proceeds on April 16, 2015.

Doheny Condo, Los Angeles (Initiated and Settled 2015)

On February 25, 2015, we sold our Los Angeles Condo for $3.0 million resulting in a $2.8 million gain on sale.

Properties in Taupo, New Zealand (Initiated 2015, Settled 2016)

On April 1, 2015, we entered into two definitive purchase and sale agreements to sell our properties in Taupo, New Zealand for a combined sales price of $2.4 million (NZ$3.4 million). The first agreement relates to a property with a sales price of $1.6 million (NZ$2.2 million) and a book value of $1.3 million (NZ$1.8 million), which closed on April 30, 2015 when we received the sales price in full. The other agreement related to a property with a sales price of $831,000 (NZ$1.2 million) and a book value of $426,000 (NZ$615,000) which was completed and for which we received cash settlement representing the full sales price on March 31, 2016. The first transaction qualified as a sale under both U.S. GAAP and tax purposes during the year-ended December 31, 2015. The second transaction was recorded as a sale during the quarter ended March 31, 2016.

Real Estate Acquisitions

New Corporate Headquarters Building, Los Angeles (Asset Acquisition, 2016)

On April 11, 2016, we purchased a 24,000 square foot office building with 72 parking spaces located at 5995 Sepulveda Boulevard in Culver City, California (a Los Angeles suburb) for $11.2 million. The terms and circumstances of this acquisition were not considered to meet the definition of a business combination in accordance with US GAAP. We intend to use approximately 50% of the leasable area for our headquarters offices and to lease the remainder overtime to unaffiliated third parties.

Building & Landholding in Newmarket, Australia (Asset Acquisition, 2015)

On November 30, 2015, we completed the purchase of an approximately 23,000 square foot parcel adjacent to our existing Newmarket shopping center in Brisbane, Australia for a total consideration of $5.5 million (AU$7.6 million). The acquired land has an existing office building which was vacant at the time of purchase completion. We intend, over time, to integrate this property into our Newmarket development thereby increasing our footprint from approximately 204,000 to 227,000 square feet. The terms and circumstances of this acquisition were not considered to meet the definition of a business combination in accordance with US GAAP.

Cannon Park ETC in Queensland, Australia (Business Combination, 2015)

On December 23, 2015, we completed a 100% acquisition of two adjoining properties in Townsville, Australia for a total of $24.1 million (AU$33.4 million) in cash. The properties are located approximately 6 miles from downtown Townsville, the fourth largest city in Queensland, Australia. The total gross leasable area of the two adjoining properties, the Cannon Park City Centre and the Cannon Park Discount Centre, is 133,000 square feet. The Cannon Park City Centre is anchored by Reading Cinemas, which is operated by Reading International’s 75% owned subsidiary, Australia Country Cinemas, and has three mini-major tenants and ten specialty family oriented restaurant tenants. The Cannon Park Discount Centre is anchored by Kingpin Bowling and supported by four other retailers. This acquisition is consistent with our business plan to own, where practical, the land underlying our entertainment assets.

The acquired assets consist primarily of the land and buildings, which, at the time of acquisition, was approximately 98% leased to existing tenants. Tenancies ranged from having 9 months to 8 years left to run on their leases at the time of purchase.

We have concluded the acquired assets constitute a “business” and we accounted this as a business combination. During the quarter ended September 30, 2016, the Company finalized the allocation of the purchase price to the identifiable assets acquired and liabilities assumed based on its estimates of their fair values on the acquisition date. The acquired value components of this real estate acquisition included both tangible and intangible assets. The determination of the fair values of the acquired assets and assumed liabilities (and the related determination of estimated lives of depreciable tangible and identifiable intangible assets) requires significant judgment. The estimates and assumptions include projected timing and amount of future cash flows and discount rates reflecting the risk inherent in the future cash flows. Typical of a real estate acquisition, there was no goodwill recorded as the purchase price did not exceed the fair value estimates of the net acquired assets.

The following table summarizes the final allocation of the purchase price to the estimated fair values of assets acquired and liabilities assumed at the date of acquisition, as well as adjustments made during the measurement period:


					Measurement
	Preliminary Purchase Price				Period		Final Purchase Price
	Allocation				Adjustments(2)		Allocation
(Dollars in thousands)	US Dollars(1)		AU dollars		AU dollars		US Dollars(1)		AU dollars
Tangible Assets
Operating property:
Land	$	7,525	$	10,421	$	721	$	8,046	$	11,142
Building and improvements		16,588		22,971		(6,453)		11,928		16,518
Site improvements		--		--		2,321		1,676		2,321
Tenant improvements		--		--		957		691		957
Intangible Assets
Above-market leases		--		--		61		44		61
In-place leases		--		--		2,135		1,542		2,135
Unamortized leasing commissions		--		--		333		240		333
Unamortized legal fees		--		--		55		40		55
Total assets acquired		24,113		33,392		130		24,207		33,522
Liabilities
Below-market leases		--		--		(130)		(94)		(130)
Net assets acquired	$	24,113	$	33,392	$	--	$	24,113	$	33,392

(1) The balances were translated into U.S. Dollars based on the applicable exchange rate as of the date of acquisition, December 23, 2015.

(2) The measurement period adjustments were mainly due to the finalization of the valuations of the tangible land, building and improvements, site improvements and tenant improvements, as well as valuations of intangible assets and liabilities typically present in an acquisition of a regional mall with existing tenancies. This resulted in a reallocation of the purchase price from Building to other tangible assets (site and tenant improvements), as well as to intangible assets, including above and below market leases, in-place leases and unamortized lease origination costs.

The revenue and earnings from this acquisition, since the acquisition date as included in the consolidated statement of operations for the year ended December 31, 2015, were not significant. Based on the available information provided to us and after exhausting significant efforts to satisfy the pro-forma disclosure requirements assuming the business acquisition happened at the beginning of the year, the Company concluded it to be impracticable to determine and disclose the full-year pro forma combined revenue and earnings for 2015.